Moscow, 26 Mar — “News. Economy”, Google has surprised many by announcing last week the launch of a new service of cloud gaming Stadia, but the company has not yet revealed how the service will make money. Despite the lack of information on monetization strategies, analysts agree that the models based on advertising, will definitely be insufficient to support ambitious game project Google.
In Google believe that Stadia is the “beginning of the gaming revolution” and “transition to a future without consoles.” However, the company in the presentation of the ignored one important question — how much will all this cost?
The answer is important not only for active gamers, but also for business Google in General. Stadia can bring the business model of the Internet giant to a whole new level he struggled trying to achieve over the years.
So far, the main assumption with regards to the possible monetization models is the traditional scheme of “pay to play”. But for Google it would have marked the transition from the free provision of services in exchange for users viewing ads.
Patrick Moorhead, principal analyst at Moor Insights and Strategy, believes that a purely advertising model would be an ideal source of income for Stadia, given the questionable Google experiments with subscription services, but these chances are extremely unlikely. The analyst believes it is unlikely a situation in which “advertising” the Google experience can be successfully transferred into the game world, at least in the short term. “The reality is that it will take decades in order to optimize the gameplay and content for this model,” said Moorhead.
In an interview with Business Insider Jack Buser, head of business development Stadia, declined to give any details about how the service will be offered to consumers. “We are not talking about the business side of things,” he said.
According to the analyst eMarketer Eric Hegstrom, today the industry of games, which are monetized by advertising, is $3 billion, However it represents mostly low-quality mobile games. He believes that Google can use monetization in the style of Fortnite and Apex Legends where basic gameplay is free, and money can buy beauty items. In his opinion, this will allow Stadia to keep his promise — to create a platform with a minimum barrier to entry for players.
What Google is silent with respect to monetary issues made investors, competitors and other industry insiders to wonder how a company earns money on such an ambitious and expensive project.
Google has built a billion-dollar business Empire on advertising, while creating a successful service subscription, the company has not yet emerged. Among recent examples was the failed competitor to Netflix and Amazon Prime — YouTube Premium. In November last year, the company decided to slow down, seeing the futility of the effort to attract audience.
Some experts believe that advertising is such a fundamental part of the DNA of Google that creating a successful paid service is simply contrary to the mentality and the inner nature of the company. And if Google decides to charge consumers directly for the games at the Stadia, it will have to take some important decisions.
Michael Pachter, managing Director of Wedbush Securities believes that Google may choose the model of iTunes or Apple Music. The iTunes model means that users have to purchase each game separately, and the approach Apple Music will turn Stadia into the service with a monthly subscription.
The difference between subscription and fees can be significant. Google suggests that Stadia will become a platform where anyone with an Internet connection and the Chrome browser can start playing in seconds. For this reason, some believe that the model with paying for each game can hinder the vision of Google about instant play at the touch of a button.
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